Thursday, June 16, 2016

EU Based Global Corporations 'Controlled by a Small Number of Rich Families For Generations'

According to Prof. Michael Hartmann from the University of Darmstadt, many European businesses such as BMW and VW have been owned or controlled by a small number of elite families for several generations. Members of the same families have held influential positions in the upper echelons of society for centuries and now control most of the large enterprises in European countries.

For eample, Hartmann's report says, the share of family controlled businesses (i.e. members of one family hold enough shares to give them control of all boardroom policy) in the German economy is very high, not only among large companies, but also in the mid-market.

Such trends can be explained by the fact that Germany's economy is less focused on financial and commerce than on industry where the family traditions are stronger.

"48 out of the 100 largest German companies are controlled by manufacturing families : they are either under absolute control, or under that of a blocking minority. There is nothing like that in other countries — neither in Italy, nor France, the United States or Great Britain," the Professor told an audience of business journalists at the launch of his paper.

Hartman explained that in Germany control of some businesses has been passed down for as many as six generations and there are a few which were founded during the industrial revolution and have been owned by the same family since the 17th century.

"In terms of the number of world's richest people, Germany ranks third after the US and China: there are 67 billionaires with a nominal worth of over € five billion each. In Japan there are 13, in the UK — 33, in France — 23. In none of the countries of a comparable size there is such a large number of billionaires. It arises from family structures in industry and commerce as well as their long tradition," Hartmann stated.

In contrast to China or Russia, where oligarchs made their capital in the 1990s, using their political connections, German industry has the very important phenomenon of continuity, the expert argued. The family business has a long tradition in Germany and is less dependent on political contacts.

"In Germany, the legacy — and this is clearly manifested in the tax system — is associated with the family and enjoys public recognition. At the same time, there is a problematic aspect of such a trend, which concerns the distribution of wealth and taxation," Hartmann said.